tv Nightly Business Report PBS February 13, 2013 1:00am-1:30am PST
it's fallen so far that even the massive stimulus plan was not enough to make up the gap, and that's the challenge for the president. he's expected to propose more spending on infrastructure tonight, but to make a big difference, the amount spent would have to be large enough to offset the downward trend for public projects. >> if there is no net change in the spending, which is the situation we've seen in the recession and the recovery, then it can't be a very big source of employment gain. >> reporter: aides say the president will continue to focus his efforts of developing manufacturing jobs. that's likely to include more programs to train workers for high-tech production tasks. that's good news to manufacturers, but they're very worried about other parts of the president's speech. an aggressive climate change policy could mean more regulations that employers fear will offset other policies designed to create jobs. manufacturers argue new environmental rules have been particularly costly. >> they cover everything from
boilers to cement kilns to power plants to oil refineries, and inflicted a significant cost that wasn't there four years ago and has made it more expensive to manufacture. >> reporter: the great recession created an employment crisis, but slow job growth has been a problem for decades. business startups began falling in the 1980s, and that trend picked up speed after the 2001 recession. no one is sure why that is, and until economists figure it out, it will be difficult to get a strong jobs recovery going. darren gersh, "n.b.r.," washington. waiting for president obama's speech. now despite a cautious day of trading, the dow closed at its highest level in more than five years, and returned to the psychological important 14,000 level. the dow gained 47 points, and the nasdaq lost five, and the s&p 500 up two points. even though the stock
market has made dramatic moves, and trading volume today and throughout february has been light. market pros say that's because investors are searching for new reasons to buy equities. there's a chance president obama might give them some tonight in his state of the union address. suzanne pratt has the story. >> reporter: with earnings season winding down, wall street could use some new headlines to chew on. good economic data would be nice. friendly washington politics would also be helpful. tonight's state of the union speech might give investors a clue as to whether that's likely to happen. veteran trader teddy weissberg is hoping president obama will stress the need for bipartisanship but isn't sure that's what he'll hear. >> in terms of tonight, i don't think anybody that i talk to in the wall street arena expects to hear anything terribly dramatic one way or another. >> reporter: since lawmakers and the white house kicked the proverbial can down the road around new years, the stock market has rallied rather nicely.
the s&p 500 is up nearly 7% and the dow is about 150 points away from its all-time high. of course, stocks have been getting help from corporate america, too. it turns out fourth quarter profits were better than expected, led by the housing sector and financial firms. >> about 345 companies have reported so far, of which 70% have beaten earnings expectations and 66% have beaten revenue expectations. both of these are stronger than the long-term average of 63%, which underlines how many companies have really beaten. >> reporter: despite solid earnings at the end of last year, there are fresh worries about the state of the u.s. economy and profits for this year. on top of that, financial conditions in the eurozone are still a threat to u.s. stocks. >> with the market at current levels, which... basically looks like they're priced for perfection, there doesn't leave a lot of room for any
disappointing news. and there are a lot of areas that could create disappointing news. >> reporter: weissberg says many market pros believe stocks are headed higher, but they need a catalyst, and that's unlikely to come from tonight's state of the union. suzanne pratt, "n.b.r.," new york. >> susie: still ahead, why ailing smartphone maker blackberry is hoping the sports market will help it on its road to recovery. we'll explain in tonight's "beyond the scoreboard." a "silly sideshow--" that's what apple c.e.o. tim cook called a recent lawsuit filed by hedge fund manager david einhorn. speaking at a goldman sachs technology conference today, cook also said apple is considering einhorn's proposal to issue preferred stock and return more money to shareholders. einhorn and his firm greenlight capital sued apple last week as part of a broader effort to push the tech giant to dole out more of its $137 billion hoard of cash.
as for apple stock today, it tumbled 2.5% to about $468. just five months ago, the stock was trading at $700. meanwhile, uncle sam's cash situation is improving a little bit. the u.s. treasury posted its first monthly budget surplus since 2008, and thanks to a jump in tax revenue. it's now $2.9 billion in the black for january. that's a big improvement over the $27 billion deficit a year earlier. but despite that turnaround, lawmakers still need to make major cutbacks in order to keep government debt in check.
>> susie: the group of seven industrialized nations issued a statement today saying that any stimulus programs they undertake are aimed solely at spurring domestic demand and are not an effort to weaken their currencies, but this aggressive monetary policy, and what some call "turning on the printing presses," means currencies get weaker. and while that makes exports cheaper for overseas buyers, not everyone benefits. ruben ramirez reports. >> reporter: if there was any doubt how interconnected economies around the globe are, you need look no further than what's happening in the currency markets as governments try to spur growth. >> the difficulty of achieving that i think is why you are seeing the issue of currency wars coming up more and more. >> reporter: the g-7, which includes countries like the united states, the united kingdom and germany, issued a statement saying that it wants to jumpstart domestic growth without explicitly targeting a currency exchange rate. currency watchers interpret it a different way.
>> a lot of it is just posturing. you've got all these central banks trying to devalue their currency as a way of trying to get growth reaccelerating. >> reporter: growth is key. one of the biggest culprits right now is japan. the country's new government is taking an aggressive policy to weaken the yen that makes exports of everything from tvs to cars less expensive for overseas buyers. japan isn't alone; the united states is also undertaking similar policies. but europe is a different story. the e.c.b.'s balance sheet is tightening, making the euro stronger. >> a stronger currency is a problem for europe at this point in time when growth is very weak. europe is still in a recession, and we expect this recessionary environment to persist in 2013. >> reporter: a stronger euro makes imports of u.s. goods cheaper, and that could give some u.s. companies a boost in european sales. >> they'll get the most benefit from taking those euros that
they earn abroad in europe and bringing them back home to the united states, where the currency has now become a little bit weaker. it'll have a little bit of a tailwind to their profits. >> reporter: much of the money printing in the u.s. and japan will likely pour into developing economies as investors hunt for bigger returns, but it could also inflate the currencies of those countries and create an asset bubble. >> the more monetary easing we see in the major economies, the more we are going to see a move towards interventionism and capital controls in the emerging economies. >> reporter: analysts say, come the g-20 meeting this weekend in moscow, any talk of a currency war will likely take place behind closed doors and away from the scrutiny of currency watchers. ruben ramirez, "n.b.r.," new york. >> susie: those tensions over foreign currencies will be an important issue in moscow this weekend when g-20 officials meet. for more on that and the outlook for international investing, we turn now to nick colas, chief market strategist of convergex group. >> susie: hi, nick. let me start by asking you more about this currency issue. you know it is very
intricate and complicated for most individual investors to understand. what is the risk if this currency issue escalates? >> yeah. it is a very good question. there are really two risks that investors need to worry about. the first is that these currency wars only benefit one country, the country that is weakening its currency. it creates a lot of volatility and uncertainty in the rest of the global market. the actors who want to invest in the market, consumers and companies, get worried that currency volatility is going to make the future less predictable. that's problem number one. problem number two is it interferes with the co hegence concerns, when you have one country trying to get over on another country by weakening its currency, that kind of cohesion tends to erode. and both things end up slowing global growth and endangering what is a
very, very slow global recovery. >> susie: these maneuvers are a lot for individual companies to get their local economies growing again. can you give us an update of what is going on around the globe. >> let's go around the globe very briefly. in europe, we have a very, very slow recovery. we have recession in several large countries, particularly in southern europe. in the u.k., that is still stagnant. germany is very slow growth, at best. in the u.s., you know we have very slow growth. we had a negative g.d.p., and in asia, japan, we've had 20 years of slow progression. and china is still growing, single-digit levels of growth. brazil is still growing, and russia is still growing. india, which is the fourth of the brick countries, should have a better track in 2014. >> susie: depending which country you're talking about, we've seen
investors pouring a lot of money into international equity funds since january. so can they expect to get a good return on international investing in 2013? >> susie, it is going to come down to everybody's timeframe. we are a culture that wants it now. we've been through a lot of problems recently that make people very risk adverse. if you have the patience to sit through volatility, buying emerging markets is a good investment now. however, if you still feel burned by what happened in 2007 and 2008, and are worried that a 10% pullback or a 15% pullback would make you change your approach, be very careful and buying emerging markets. we've had a great run since november and i would counsel some caution. >> susie: you are advising your clients to put their money mostly in u.s. stocks over international stocks. give us your thinking there. >> my thinking there is pretty straightforward. what happens is we've had,
again, this very strong run for risk assets, basically stocks, all over the world. we've had three or four or five months of that. inevitably what happens is we get a bit of a pullback. i won't be surprised to see a 5% to 6% pullback in the u.s. market in the beginning of the second quarter, but that means emerging markets could see a 15% pullback because they trade more aggressively than u.s. stocks. u.s. stocks still have a lot of good growth potential, but they're going to pullback if i'm right and we see a pullback globally. >> susie: just to wrap up, a question about the state of the union address. what would you like to hear from president obama? >> we heard a lot of about social justice during the inaugural speech, which was on point. but i think investors are looking for more meat on the bone when it comes to building the economy in
2013. >> susie: nick, thank you so much for coming on the program. nick colas, chief market strategists for convergex group. >> susie: general electric is selling its remaining 49% stake in nbc universal to comcast for $16.7 billion. as part of the deal, comcast will also buy nbc's studios and offices at 30 rockefeller plaza as well as cnbc's headquarters in new jersey. it is possible that the big g.e. sign on the top of that building could be replaced with a comcast logo.
the deal completes a sale process that was supposed to take several more years. now, for its part, comcast says the move reflects optimism about the future prospects of nbc universal. well, here at the big board, more green than red thanks to that powerful rally on wall street today. investors were encouraged by upbeat earnings from a variety of different companies. also, many investors are hopeful president obama's state of the union address will spell out ways to help the economy. several big financial stocks led the market higher, but there were also big moves in retail and telecom services. shares of barclays surged on its plans to eliminate several thousand jobs as part of a three-year turnaround effort. the u.k. bank also hopes to rebuild its reputation after admitting to trying to trying to rig interbank lending rates. investors like the plan to cut costs and better position the bank for a tougher regulatory environment. so the shares surged over 9% to $20.55. but many of barclay's competitors also moved higher. bank of america rose over 3%,
making it the biggest gainer in the dow. j.p. morgan and travelers were both up about 1%. fashion designer michael kors was another big gainer thanks to better than expected third quarter earnings and revenues. the company credits higher sales and the opening of new stores. but what really helped the stock: the company lifted its full-year earnings guidance. the shares rallied nearly 10% or $5 today to $62 a share. new york and company, the women's apparel retailer, also raised its guidance, but just on fourth quarter sales. the chain now expects sales to gain 2.3% thanks to successful a holiday season. the stock jumped 7% to $4.30. fashion accessories retailer fossil also got a boost today, rising 3% to $110 a share. the company says fourth quarter earnings rose 28%, much better than expected. sales growth was strong in its wholesale divisions in north
america and asia. in other news, fossil inked a new licensing deal with tory burch for a new watch collection with the designer's name. we have technical analysis of fossil's chart. it's on the web at www.nbr.com. just look for michael kahn under the "blogs" tab. shares of avon were also attractive to investors today. the company reported a fourth quarter loss, but it was less than expected. in addition, sales in some international markets like brazil and russia appear to be improving. that good news helped the stock soar more than 20% today to $20.79 a share. but shares of coca-cola fizzled almost 3% on disappointing fourth quarter numbers. investors were disappointed that global sales volume rose just 3%, that's the lowest quarterly increase of the year. coke blames the weakness on a slowdown in europe and china and lukewarm demand in the u.s. and shares of valspar also slipped on disappointing earnings news. the stock tumbled 7.5%. quarterly earnings fell more
than 1%. sales were flat at its key coatings segment, and paint revenues dried up during the quarter. and finally, for the second day running, the s&p vix exchange traded note was the weakest among the top five most actively traded exchange traded products. and that's tonight's "market focus." >> susie: mother nature has been on a rampage-- the massive snowstorm in the northeast, hurricane sandy and the drought in the midwest last summer. sandy and the drought alone accounted for the majority of
insurance losses in 2012. so, what's the impact on the insurance industry and businesses? al tobin heads insurance giant aon's property practice and says sandy has businesses in the northeast scrambling to boost their coverage. >> so, today we see customers who are very concerned about buying proper limits particularly for flood, for storm surge. it's kind of a technical term, but there was a huge storm surge created by sandy in lower manhattan. up to 13 feet of water cascaded into lower manhattan itself. in those examples, clients are looking to buy more coverage, so there's a little bit of a spike in buying, we anticipate, for 2013 for those customers exposed in that region. >> susie: last year, rates rose nearly 3% on average, but this year tobin expects them to stay about the same or move just slightly higher depending on potential windstorm exposure.
coming up tomorrow on "n.b.r.": alamos gold is going south of the border. it's going to start trading here at the n.y.s.e. we'll talk to the c.e.o. about its u.s. i.p.o. and tomorrow, we'll also be on the lookout for the latest retail sales numbers and get another housing market check up with weekly mortgage applications. as we mentioned earlier, people will be tuning in to president obama tonight to hear what he outlines for job growth and the greater economy. but do you remember what presidents focused on during previous addresses? a look at the state of the union address by the numbers. here's "the street's" joe deaux. >> businesses, companies -- president obama has uttered those words, 66% of all time said than any other president since 1978. unlike presidents carter, reagan, h.w.bush and w.bush, president obama's first state of the union
address took a more negative term. >> one in ten americans still cannot find work. >> reporter: but the 2012 version sounded more upbeat. >> president obama: in the last 22 months, businesses have created more than 3 million jobs. >> clearly obama'spredecessors d different circumstances. what was george w. bush's favorites? >> terrorism is terrorism. >> he said it 111 time. clint favored these topics? >> family health. >> president clinton spoke it 500 times. >> taxes. taxes. taxes. >> taxes rose under bush, have, of course, eventually sunk his re-election campaign. >> no new taxes. >> and reagan -- >> spending cuts.
spending. spending, spending. >> carter was preoccupied elsewhere. >> soviet union. soviet union. >> he combined to say soviet more times in three addresses than reagan did in seven. the most six most used words. >> americans. americans. >> people must work. >> joe deaux. thestreet.com for n.b.r. >> susie: there's a lesson to learn from the struggles of smartphone maker blackberry. it's important to remember that sometimes you have to take a big risk in order to reap the rewards. sports analyst rick horrow explains in this week's "beyond the scoreboard." >> in the next few weeks, blackberry will begin selling its highly anticipated q-10 and z-10 smartphones with the hopes of regaining market share. and unlike other companies in the cell phone space-- like service providers at&t and verizon, and device maker samsung-- blackberry has never
been an aggressive spender on sports advertising or sponsorship within the u.s. it's been on the edge with instead of directly in the game. the company's highest-profile north american deal is as an official partner of the n.h.l. however, as executives try salvaging a stock down 75% over two years, blackberry finally may be suiting up. the company spent nearly $4 million to buy time for a super bowl ad. important for the success of blackberry's newest devices will be the number, variety and quality of the apps available. sports fans are a key market. they want their stats, scores and stories, and blackberry needs to encourage and ensure they have a marketplace of those apps if it hopes to win back market share. i'm rick horrow. >> susie: new orleans has a lot to celebrate today. besides mardi gras, it's also still riding high from hosting the super bowl. the city's tourism officials say one million people are in town for the festivities. now, that's more than five times
as many people who showed up for the super bowl. new orleans' economy took a big hit when hurricane katrina struck in 2005, but these big turnouts are helping its economic comeback. >> tourism is our most important industry. it's a $5 billion industry for new orleans. it employs 75,000 of our local citizens, so it is absolutely critical that we continue to do events like mardi gras, super bowls, final fours, big conventions, business meetings. that is the lifeblood of the city. >> susie: she also says this year's mardi gras is expected to bring in almost $150 million and that the planning never stops. tomorrow, new orleans will start working on mardi gras 2014. well, that's "nightly business report" for tuesday, february 12. have a great evening, everyone. we'll see you online at www.nbr.com and back here tomorrow night. captioning sponsored by wpbt
>> the following kqed production was produced in high definition. [ ♪music ] >> the dance traditions of central asia come alive every time ballet afsaneh takes the stage. >> sahar hojat: one big step that we need today in international relations would be to prioritize cultural understanding. >> when henry wessel goes for a walk, he always has his camera, and the quiet photos he's been taking are an important part of photographic history. >> henry wessel: all of this is hidden from our eye. i mean, it's hidden in the flux
of time. >> mitra fabian's sculpture explores the abnormal using materials that are mundane. >> mitra fabian: i have an obsession with tape. >> and marcus gardley workshops his newest play. this time on spark. [ ♪music ] >> major funding for spark is provided by the william and flora hewlett foundation, supporting creativity and innovation in the arts since 1967. the james irvine foundation, expanding opportunity for the people of california. the william and gretchen kimball fund. diane b. wilsey. and by the kqed campaign for the future program venture fund with additional support from meridee moore and kevin king helen sarah steyer, and the phyllis c. wattis foundation. this project is also supported, in part, by an award from the national endowment for the arts, which believes a great nation deserves great art.